It can’t be that much fun to be Steve Ballmer right now. He’s the head of a company whose stock price has been stagnant: trading at essentially the same level for much of the last eight years, safe for a few upward (and downward) blips. He’s presided over one of the company’s most high-profile failures–the Zune–and is playing playing catchup in a market you essentially helped create.

One of the most prominent successes of his tenure — the Xbox 360 — is credited to somebody else, who was rumored to have left the company over his questionable business decisions.

Is the increasing chorus against Ballmer fair, or do others share in Microsoft’s failure? Or is this symptomatic of a larger shift among the company’s key customers, where Microsoft as a whole has fallen out of favor? You could make a case for any any of these scenarios.

Microsoft’s biggest problem right now is stagnancy. In the Ballmer era, the company has become reactive rather than proactive. Rather than seeking new markets to expand into, it follows its competitors — and often misses the mark in doing so, or makes them overly complex.

Zune, Windows Phone 7, Windows Vista, Ultra-Mobile PCs. All great examples of ideas that either came too late or were so unnecessarily overthought that consumers saw right through it or skimmed over them altogether. These mistakes have cost the company both time, and more importantly money.

Speaking of wasting money — how about Skype? Just about everyone seems to agree that $8.5 billion was a price too high for the company. I doubt the company will see a benefit equal to the price they paid for that company. Ever.

There are some out there that are calling for Bill Gates to return to the company’s helm, but that isn’t the answer either. Gates’ time is long past — his own vision is dated. Microsoft needs somebody who understands modern computing. Even he admits that people like Jobs have far more of a knack for “thoughtful product design” then he does.

Thus, Microsoft might find itself looking to the outside for the man (or woman) to guide it out of the wilderness. While it may be great to put on a public face of support for your embattled leader, at the same time the company has a responsibility to think about what life will be like beyond Ballmer.

4 Comments For This Post

How did i forget the Kin? So much promise… so little faith.. but Verizon is the one that actually killed that with their overpriced plans for it. Guess you could blame it on MS for partnering with them in the first place, but..

The Kin was doomed far before Verizon had the opportunity to overprice it. Not only was Microsoft myopic enough to release a new, dissimilar mobile platform right behind their Windows Phone 7 platform, but the development of the device was grossly mismanaged. Consumers who purchased the new device were settled with an expensive, incomplete, and buggy device. Oh well, at least Microsoft cut their losses early and killed the device less than a month after release.

Other platforms such as the Zune (as a standalone device), however, were not so lucky.

It's a pattern. Microsoft had tons of ambition, imagination and commitment during the years of achieving market leadership. But ask anyone in a practical or legal monopoly what it's like trying to innovate in that context, and you'll hear strong echoes of Microsoft's problem.

Their complacency in the mobile market would be extraordinary but for the fact that they've bought their own line that in the end, it all comes back to Microsoft. The rot set in long before Apple's resurgence. How could they fail to respond to the shout-out-loud signal from Blackberry?

I would argue that Gates could be exactly the man to restore the mentality that Microsoft needs to earn its way back into spaces it's being eased out of, deeper into areas that are under less threat, and any and every way into the places technology is going without Microsoft in tow. He can't be the long-term answer, but when the company feels like it's in a long slide, long-term isn't the problem.

Neither how far the malaise can legitimately be traced to Ballmer, nor what successes he can claim, is the point. The company needs to feel that it's under visionary leadership, not simply playing out a long end game. You could count the people who have the profile and credibility to do that on the fingers of one hand. Eliminate people in jobs they're not going to leave, and you have very few choices.

Rise to the challenge, or play out the decline? The latter would excite some. The break-up value of Microsoft has to exceed the present value of the whole. You could slice and dice three great businesses, maybe four.

Microsoft has some great assets, an amazing talent pool, and a huge problem. Something needs to change, and fast.